Steel Dynamics sees Q1 adjusted EPS $3.78-$3.82, consensus $3.11

First quarter 2023 profitability from the company’s steel operations is expected to be meaningfully stronger than sequential fourth quarter results, based on increased shipments across the platform more than offsetting metal spread compression as average realized selling values associated with lagging indexed-contracts declined in the quarter. Steel pricing has since strengthened in the first quarter, and steel producer lead times have extended as steel demand is strong. The automotive, non-residential construction, energy, and industrial sectors continue to lead demand. Included in the company’s first quarter 2023 guidance estimate and as previously discussed, the first quarter 2023 steel earnings are expected to be negatively impacted by an estimated $64 million, or $0.26 per diluted share, as the steel mills work through the higher-cost pig iron that was purchased earlier in 2022 during the early stages of Russia’s invasion of Ukraine. First quarter 2023 earnings from the company’s metals recycling operations are also expected to be significantly higher than sequential fourth quarter results, based on substantially stronger metal margin and volumes for both ferrous and nonferrous products, as selling values and demand continue to improve throughout the quarter. First quarter 2023 earnings from the company’s steel fabrication operations are expected to be historically very strong, but lower than record sequential fourth quarter results, based on lower shipments due primarily to supply-chain constraints facilitated by extending backlogs for steel fabricator customers and lack of sufficient construction materials and skilled labor, resulting in some projects being delayed to later this year. First quarter 2023 metal margins are expected to be comparable with record fourth quarter margins, and order activity has strengthened from fourth quarter 2022 seasonal levels. The non-residential construction sector remains strong, as further evidenced by a solid order backlog with robust forward-pricing for the company’s steel fabrication platform. In addition, the continued onshoring of manufacturing, coupled with the robust U.S. infrastructure program and industrial build-outs, supports strong demand in the coming years.